Archive
Archive for January 5, 2010
It appears there is a breakdown in the relationship between unemployment and house prices. I hazard a guess that its due to the low home loan interest rates we currently have (see my previous post) but given it appears the Reserve Bank looks like increasing rates further this year, for how long will this breakdown last?…probably not too long…my guess….house price growth is unlikely to be sustained and the property purchaser needs to be careful.
Source:RBA
The above chart shows the changes in interest rates since the start of 1997 for 3 different bank loans…
- Credit Card Interest Rates
- Personal Loan Variable Interest rates
- Home Loan Standard variable interest rates
Now, over the past 18 months we have all heard about ow the banks have not been passing on all of the RBA interest rates cuts and passing on even more than the RBA’s interest rate increases. This piece of information relates to the Standard Variable home loan rates which as the green line shows, as at the end of November, is at roughly the lowest levels since the beginning of the chart in 1997.
Unfortunately for those stuck in the debt trap of the personal loan or credit card, interest rates continue to be historically high…despite lower Reserve Bank rates, credit card and personal loan rates were lower just over 2 years ago and were never higher from the start of the chart in 1997!!! No wonder the rich get richer and the poor get poorer.
